AFRICAN DEVELOPMENT FUND MAURITANIA

AFRICAN DEVELOPMENT FUND MAURITANIA YOUTH TRAINING AND EMPLOYMENT SUPPORT PROJECT (PAFEJ) APPRAISAL REPORT OSHD/GECL October 2014 Translated Document

TABLE OF CONTENTS I. Strategic Thrust and Rationale... 1 1.1 Project Linkages with Country Strategy and Objectives... 1 1.2 Rationale for Bank Involvement... 2 1.3 Aid Coordination... 4 II. Project Description... 5 2.1 Project Component... 5 2.2 Technical Solutions Adopted and Alternatives Explored... 6 2.3 Project Type... 7 2.5 Project Area and Beneficiaries... 9 2.6 Participatory Approach for Project Identification, Design and Implementation... 9 2.7 Bank Group Experience and Lessons Reflected in Project Design...10 2.8 Key Performance Indicators...11 III Project Feasibility...11 3.1 Economic and Financial Performance...11 3.2 Environmental and Social Impact...12 Gender...13 IV Implementation...13 4. Implementation Arrangements...13 4.2. Monitoring of Project Activities...16 4.3. Governance...16 4.4 Sustainability...17 Inadequate involvement by the various ministries in the preparation and implementation of this strategy....17 MEFPTIC's inadequate capacity for implementing the National Employment Strategy....17 Lack of productive sector participation...17 4.6 Knowledge Building...17 V Legal Framework...17 5.1 Legal Instrument...17 Annex I Annex II Annex III Annex IV Annex V Annex VI Country's Comparative Social and Economic Indicators Table of AfDB Portfolio in the Country Major Related Projects Financed by the Other Development Partners of the Country Mauritanian Government's Request for the Financing of the Youth Training and Employment Project (PAFEJ) Value-Added of the Partnership with ILO for the Implementation of the National Employment Strategy and the Establishment of SIMEF Map of the Project Area

Currency Equivalents April 2014 Currency Unit = Mauritanian Ouguiya (MRO) UA 1 = MRO 462.522 UA 1 = EUR 1.121 Fiscal Year January December

Abbreviations and Acronyms ADF AECID AFD AfDB AU C2D DGPPI DPEF EU FAP-FTP UNFPA FRMB GPE ILO INAP-FTP IsDB ISET MAED MEFPNTIC NA NGO NSO PAAB PAFEJ PAGOCI PIU PRSF PTFs SIMEF TVT UE UNPM VT WB African Development Fund Spanish International Development Cooperation French Development Agency African Development Bank African Union Debt Reduction-Development Contract Directorate General of Investment Programmes and Projects Directorate of Education and Training Projects European Union Technical and Vocational Training Support Fund United Nations Fund for Population Activities Resource Mobilization and External Finance Department Global Partnership for Education International Labour Organisation National Institute for the Promotion of Technical and Vocational Training Islamic Development Bank Higher Institute of Technology Ministry of Economic Affairs and Development Ministry of Employment, Vocational Training and New Information and Communication Technology Not Applicable Non-Governmental Organisation National Statistics Office Budgeted Annual Action Plan Youth Training and Employment Support Project Governance and Inclusive Growth Support Project Project Implementation Unit Poverty Reduction Strategy Framework Technical and Financial Partners Labour Market and Training Information System Technical and Vocational Training European Union National Employers Union of Mauritania Vocational Training World Bank i

Project Information Client Information BORROWER: EXECUTING AGENCY: Islamic Republic of Mauritania Ministry of Employment, Vocational Training and New Technology Financing Plan Source Amount (UA) Instrument ADF Government 2 000 000 225 000 ADF Grant TOTAL COST 2 225 000 Key AfDB Financing Information Grant Currency Interest Type * Interest Rate Margin * Commitment Fee * Other Charges * Tenor Grace Period FRR, NPV (baseline scenario) ERR (baseline scenario) UA NA NA NA NA NA NA NA NA Timeframe Main Milestones (expected) Concept Note Approval April 2014 Project Approval September 2014 Effectiveness November 2014 Last Disbursement December 2017 Completion December 2017 ii

Project Overview Needs Assessment Targeted Beneficiaries Outcomes and Impact Bank Value Added Knowledge Building Project Summary This project is an institutional support operation costing a total of UA 2 million, spanning the 2014-2018 period, and aimed at improving the employment situation of young people. It revolves around two components: (i) placement of employment at the heart of sector policies; and (ii) improvement of the relevance of the training received by young people. The development of a national employment strategy and its operationalization through the integration of employment in sector policies will help to better structure the State's intervention. The establishment of a labour market and training information system (SIMEF) will make it possible to institute an evaluation culture and ensure the availability of gender-disaggregated data. The project also seeks to enhance the anchoring of training in the productive sector by developing tools for analysing labour market skills needs so as to adjust curricula with a view to improving youth employability. Analysis of the unemployment structure has highlighted the difficulties of integration of first-time job seekers and therefore the mismatch between training and the needs of the economy. Skills mismatch and gaps in both the formal and informal sectors are the major constraints to private sector development and job creation in Mauritania. The growth of the working population, coupled with unemployment and job insecurity, calls for a strategic repositioning of employment to place it at the heart of public policy. In the absence of a proactive employment policy whose objectives and activities are reflected in all productive sector strategies, the efforts of the State and donors remain focused on pilot projects with no significant impact on the entire territory and whose sustainability remains an open question. The project will directly benefit: (i) 8 000 youths who will be assisted by the employment support service (50% of them young women), 6 000 vocational training students and, in particular, 1 275 building and construction trainees (49% of them girls), employees of 430 enterprises of the formal and non-formal building and construction sector; (ii) state structures responsible for basic and continuing training (the Directorate of Vocational Training and the INAP-FTP); (iii) the institutions responsible for employment promotion (Directorate of Integration, Directorate of Employment and the ANAPEJ); and (iv) other Ministries with a sector strategy integrating employment objectives; and (v) the National Federation of Building and Construction Companies. In the medium term, the implementation of the National Employment Strategy should make it possible to reach 71 157 unemployed persons, including 33 000 women and 52 400 youths aged 14 to 35 years. The expected long-term impact of implementing the project-support reforms is that youth unemployment rates will drop from 14.3% in 2012 to 12% by 2020. The expected medium-term outcomes are: (i) the adoption of the gender-sensitive national employment strategy and its budgeted operating plan; (ii) the integration of employment objectives in at least two key sectors; (iii) the establishment of a labour market and training information system which will serve as a decision-making support tool; (iv) the structuring of employment market intermediation enabling at least 8 000 young people to benefit from integration support; (vi) the introduction of at least three new renovated training course in the building and construction sector; and (vii) the establishment of a system for monitoring the integration of vocational training graduates in at least 11 training centres. The Bank has experience in the design and monitoring of youth employment and training support projects. The Bank may thus capitalize on interventions in various countries (Morocco, Tunisia, Côte d'ivoire, Rwanda, etc.) and promote the exchange of best practices. The Bank conducted a study in 2013 on Growth and Employment in Mauritania, which has contributed not only to the appraisal of this project, but also to the design of the country's employment and training priority action plan, validated on 10 April 2014. The project is also in line with the Joint Initiative on Youth Employment in Africa through which a partnership is envisaged with the International Labour Organization. PAFEJ will allow for the production of analytical reports on the labour market through the employment survey scheduled for 2016. This survey will help in the production of reports on youth employment and gender disparity in the labour market. Moreover, PAFEJ will also enable the conduct of several studies to inform the key sector-based reforms that will be initiated, including through: (i) a study on the labour market intermediation structuring; (ii) a feasibility study for the establishment of the Mauritania Employment Fund ; and (iii) the study to monitor the integration of vocational training graduates. Under the project, capacity building and technical assistance activities will be carried out to support the effective implementation of the reforms and recommendations of these studies. iii

OUTPUT OUTCOMES IMPACT Results-Based Logical Framework Country and Project Name: Mauritania - Youth Training and Employment Support Project (PAFEJ) Project Goal: Improve the socio-economic integration of young people by placing employment at the heart of sector policies and improving the relevance of training offered to young people RESULTS CHAIN Better socioeconomic integration of young people PERFORMANCE INDICATORS Indicator (including CSI) Reduction of youth (15-34 years) unemployment rates, including among women (W) Baseline Situation 14.3% in 2012 (W) 18.3% Target 12% in 2020 (F) 15% MEANS OF VERIFI- CATION NSO Report RISKS/ MITIGATION MEASURES Sector policies are more geared towards job creation Number of sectors defining employment objectives - At least 3 sectors (2018) MEFPTIC Report Risk: Deterioration of the macroeconomic situation Improvement of the integration of vulnerable youths Number of youths being assisted by the integration support centre (CAP Insertion) 6500 (2013) W: 47% 8000 (2018) W: 50% MEFPTIC Mitigation measure: Continuation of on-going economic reforms with the support of technical and financial partners. Provision of training tailored to market needs Number of renewed streams included in the building and construction sector None At least 3 in 2018 MEFPTIC Component 1: Support for the integration of employment in public policies An integrated employment strategy is designed A job market and training information system (SIMEF) is set up and operational Development of a national employment strategy; and operational action plans are validated by the Government Action plans for the creation of jobs in two key sectors Diagnosis and an institutional structure for the management of the SIMEF is proposed Number of baseline surveys on employment Conduct of a study on gender disparities in the labour market Last strategy adopted in 1998 Absence Partial diagnosis carried out in 2008 Survey conducted in 2012 Absence Validated and operational in 2016 Conducted in 2017 An institutional structure is adopted Survey conducted in in 2016 Conducted in 2017 MEFPTIC Report MEFPTIC Report MEFPTIC MEFPTIC Risk: Inadequate involvement of various ministries in developing and implementing this strategy. Mitigation measures: Establishment of the institutional framework for coordinating the employment strategy. Risk: MEFPTIC's inadequate capacity for implementing the National Employment Strategy.. Mitigation measures: Technical assistance is envisaged to enhance the capacity of officials of the Ministry in managing the employment policy. Structuring of intermediation and the financing of employment support programmes Diagnosis of labour market intermediation Feasibility study on the creation of the Mauritania Employment Fund Number of support branches for the assistance of vulnerable youth Diversity of stakeholders Absence 3 branches Establishment of a structured framework Study conducted 5 branches MEFPTIC MEFPTIC MEFPTIC iv

KEY ACTIVITIES Component 2: Skills development in conjunction with the productive sector Establishment of an integration monitoring mechanism A survey is conducted on integration monitoring Number of training centres that have set up an integration monitoring unit 2005 1 Conducted in 2016 11 (2017) Training programmes meet the needs of the building and construction sector Number of officials benefiting from training on Forward Planning of Employment and Skills Study on the skills needs of the building and construction sector Revision of the curricula of the building and construction sector Number of trainers in the building and construction sector who received renewed training Component 3: Project management and control support An efficient project monitoring system is established COMPONENTS Number of implementation reports validated Number of annual audit reports Number of interim financial reports - Lack of specific monograph Curricula dating from 1998 Nonvocational training 14 Study conducted in 2016 Curricula revised in 2017 50 trainers benefiting from the new mechanism - 1 per quarter 1 per year 1 per quarter Component I: Support the integration of employment in public policies UA 1.3 million Component II: Skills development in conjunction with the productive sector UA 0.51 million Component III: Project management and control support UA 0. 21 million Training certificates INAP-FTP Report INAP Report MEFPTIC DPEF DPEF RESOURCES Bank: UA 2 million Government: UA 0.22 million Risk: Lack of productive sector participation. Mitigation measure: Strengthening of dialogue with the federation of enterprises upstream of the project and definition of the collaboration framework v

Project Implementation Schedule vi

REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARD OF DIRECTORS CONCERNING A PROPOSAL TO AWARD AN ADF GRANT TO MAURITANIA FOR THE YOUTH TRAINING AND EMPLOYMENT SUPPORT PROJECT Management hereby submits these reports and recommendation on a proposed ADF grant of UA two million to the Islamic Republic of Mauritania to finance the Youth Training and Employment Support Project (PAFEJ), in accordance with low-allocation country provisions stipulated in Section 4.6 of ADF-13 Operational Guidelines. I. Strategic Thrust and Rationale 1.1 Project Linkages with Country Strategy and Objectives 1.1.1 Human capital promotion and youth integration are at the heart of Government priorities. These concerns are reflected in all strategic areas of the Poverty Reduction Strategy Framework (PRSF 2011-2015), namely: (i) growth acceleration and consolidation of macroeconomic stability; (ii) fostering growth in the economic sphere beneficial to the poor; (iii) human resource development and expansion of basic services; and (iv) improved governance and capacity building. The National Education Sector Development Programme (PNDSE) 2011-2016 adopts a holistic approach and integrates all operations in the sector from early childhood to higher education, including vocational training. 1.1.2 The project support will enable the country to develop a strategy and an implementation operational plan, in cooperation with the International Labour Organization. The latest employment strategy dates back to 1998 and is no longer implemented today. Pending the adoption of the new employment strategy, the Ministry of Employment, Vocational Training and Information and Communication Technology (MEFPTIC) has adopted a priority action plan that was approved by the Council of Ministers on 10 April 2014. The main thrusts of the plan will be supported by this project, particularly through: (i) the development of the national employment strategy; (ii) the institutionalization of coordination with various departments to ensure the integration of the employment dimension in sector-based strategies and action plans; and (iii) the launching of a national information system allowing for the initiation, monitoring and evaluation of employment/training policies and their implementation. 1.1.3. The project helps to implement the roadmap for the promotion of inclusive growth emanating from the 2013 study on Growth and Employment in Mauritania. The study highlighted the lack of social inclusion in the country which it attributes to: a non-modernized economy characterized by the pre-dominance of the informal sector, an underdeveloped private sector underpinned by insufficient investment, a highly agricultural workforce marked by declining productivity; an unskilled workforce and limited access to financial services and social infrastructure. The roadmap notes ten priority areas for reform: (i) maintaining vigilance over macroeconomic stability, external debt control and FDI attractiveness; (ii) raising the level and quality of intervention by the financial system; (iii) improving the functioning of the labour market and optimizing intermediation; (iv) ensuring the employability of human capital and opening up the training system to the environment; (v) improving the business climate; (vi) promoting entrepreneurship and modernizing the management of production units; (vii) intensifying infrastructure networking; (viii) creating private investment opportunities through Public Private Partnership (PPP); (ix) encouraging and supporting employment-generating exports; and (x) developing a communication strategy for Mauritania's new economic policy ambitions. 1.1.4. By Supporting the operationalization of Pillars (iii), (iv) and (vi) of the roadmap, this operation is complementary to the PAGOCI project currently being appraised. PAGOCI supports upstream macro-economic reforms required to create jobs, while PAFEJ focuses on the inclusion of employment in sector strategies and providing training-employment support. 1

1.1.5. PAFEJ is consistent with Pillar 2 of the CSP (2011-2015), and particularly sub-pillar 2 Promoting inclusive growth, which highlights the promotion of youth employment. PAFEJ is also consistent with: (i) the Long Term Strategy (LTS) 2013-2022 through the Qualifications and technologies operational priority; and (ii) the Human Capital Strategy 2014-2018, whose overall objective is to improve skills for employability by promoting inclusive systems with a view to ensuring the development and social advancement of the poor and vulnerable groups, and their release from the poverty trap. The project is also in line with the Bank s Gender Strategy: Gender Strategy 2014-2018: Investing in Gender Equality, particularly Pillar II on economic empowerment. 1.2 Rationale for Bank Involvement 1.2.1 This project will make a major contribution to the structuring of responses to the employment crisis in the country. With 72 000 unemployed, the unemployment rate, estimated at 10.1% in 2012, is characterized by wide disparities (Figure 1). It is higher in urban areas (where it stands at 16.6%, compared with 4.4% in rural areas), among youth (14.6%) and girls in particular (18.3%), compared with 5.9% for adults. The relative vulnerability of young people is also reflected by the preponderance of first-time job 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Graph 1: Youths are the most affected by unemployment, 2012 12,2% Young men seekers (66%) among the unemployed, and the persistence of unemployment, which lasts up to five years on average per unemployed person. Paradoxically, vocational training graduates face the highest unemployment risk (17.6% in 2012 and up to 31.4% for women). This is indicative of several structural constraints: few job opportunities in the formal sector (which accounts for only 4% of non-farm private employment), mismatch unemployment (that is, unemployment due to mismatch between training streams and local employment opportunities) and low workforce mobility, especially women. 1.2.2 Mauritania has a high employment potential that can meet the increasing employment demand spawned by the country's growing population. Over the past decade, a 1% economic growth was matched, on average, by a 0.57% increase in the number of jobs in Mauritania, compared with 0.58% in Tunisia, 0.61% in Senegal, 0.64% in Egypt and 0.66% in emerging Asian countries. There are employment opportunities in strategic sectors such as building and construction, agriculture, fisheries and mining. In this regard, the intensity of economic growth could increase, impacting employment in terms of quality and quantity. Qualitatively, by reducing the high rate of precarious jobs (estimated at 33.3% in 2012) and quantitatively, by providing an opportunity for the integration not only of young first-time job seekers, but also of idle young people (32.8% of youths are neither employed nor undergoing training) whose idleness may pose a threat to social peace. This quantitative challenge is extremely important, given that the potentially active population is expected to increase by close to 30% by 2024. Massive job creation would presuppose, among other things, the improvement of the business environment and the availability a better qualified workforce (only 1% of the workforce has received vocational training) that can seize the new job opportunities expected to be created. 18,3% Young women 14,6% Both combined Source : ONS Statistics (2012 Employment Survey) 5,5% Adult men 6,5% Adult women 5,9% Both combined 2

1.2.3 The current employment challenges raise the urgent need for decisive action at the strategic and operational levels. The latest National Employment Strategy dates back to 1998. The growth of the labour force, coupled with unemployment and job insecurity, raises the need to improve the inclusiveness of public policy. In this regard, the development of a new gender-sensitive strategy, the integration of employment in the country s sector strategies and the development of appropriate tools for monitoring their implementation seem indispensable. The employment strategy will pay special attention to the development of women's entrepreneurship in an effort to address unemployment among women. In fact, women are more active than men with a self-employment rate of 53.3%, compared with 40% for men. 1.2.4 Up to 23% of Mauritanian companies believe that the skills mismatch and skills deficit are major constraints to competitiveness, according to the most recent available statistics (Figure 2). This deficit is pronounced in the building and construction sector, where 80% of entrepreneurs say they have difficulty recruiting qualified staff. An objective analysis of employment opportunities and the skills needs of the Mauritanian economy would have to be carried out in order to better inform the management of the education system. Operationally, the labour market 60 50 40 30 20 10 0 Graph 2: For 23% of businesses, inadequate qualification of the labour force is a major constraint to their competitiveness Source : World Bank (2014), survey data from formal enterprises. intermediation issue deserves consideration, given the high prevalence of long-term unemployment. The establishment of the network of National Youth Employment Agencies (ANAPEJ) constitutes an initial response to the challenge of improving the employability of young people - first-time job seekers for the most part. However, these mechanisms tend to focus on urban dwellers and skilled members of the workforce to the detriment of disadvantaged youths of peri-urban areas. ANAPEJ-managed programmes are not subject to impact assessment. The existence of other youth integration support mechanisms such as Cap Insertion raises the issue of coordination and role-sharing. Reflection on the establishment of an intermediation mechanism tailored to cope with the diversity of job seekers needs to be initiated to ensure efficiency and economies of scale. 1.2.5 The establishment of an employment market and training information system (SIMEF) is essential to supporting the implementation of the new strategy. There are several structures responsible for producing labour market information, without any unifying framework that defines the roles and responsibilities of the various SIMEF links. The MEFPTIC organization chart includes a division responsible for the labour market information system, but it is not functional and its interaction with other players is not clearly defined. Statistical information on the supply and demand of employment is not regularly provided, nor does it cover the entire country (the reports of 4 regions out of 13 are available). Employment surveys are conducted on an irregular basis (2008, 2012) using different methodologies. This makes temporal comparison impossible. Weakness is also noted in the analysis and dissemination of existing data. Active employment programmes are evaluated to gauge their effectiveness. Similarly, the lack of recent surveys tracking integration limits the responsiveness of the vocational training mechanism to labour market signals. Strengthening the analysis of gender disparities in the labour market is also an important aspect of this project as it would enable better understanding of the causes of inequalities in labour market participation and employment access. 3

1.3 Aid Coordination Sector or Sub-Sector GDP Employment and Vocational 0.4% Training Stakeholders Annual Public Expenditure in UA million Government (2012 and 2013 Average) Donors Period 11.26 WB 19.93 2011-2016 Aid Coordination Level AFD 2.68 2013-2016 IDB 14.76 2012-2016 Existence of thematic working groups Existence of an overall sector programme for vocational training Existence of a sector employment programme Yes Yes No 1.3.1 PAFEJ s appraisal is conducted in synergy with the PTFs operating in the education, training and employment sector. There is a donor framework for the coordination of the National Education Sector Development Programme (PNDSE) to which the Bank belongs. The Global Partnership for Education (GPE) has just appraised a EUR 12 million project, laying emphasis on quality, access, and monitoring/evaluation of education. The Spanish Agency for International Cooperation (AECID) is implementing a Secondary Education Support Project (costing EUR 3 million). An AFD programme amounting to EUR 7 million is supporting: (i) the quality of basic education; and (ii) vocational training. The World Bank is implementing a project worth USD 17 million, using an approach that focuses on training centres and the signing of an agreement with the private sector for skills training. PAFEJ is complementary to partners' intervention in that it adopts a training-employment integrated and sector-based (building and construction) approach that consists in supporting the entire chain of training services related to the productive sector (needs identification for programme update). PAFEJ will also establish an integration monitoring system in the 10 pilot training centres to measure the efficiency of AFD and World Bank support in enhancing integration. Coordination is facilitated by organizing sector reviews, the last of which was held in February 2014 with Bank participation. In the area of employment, there is no coordination framework, but given the interest of some donors such as the European Union, which is considering an intervention in 2015, the Bank can play a catalytic role in coordinating the donors involved in this sub-sector. Indeed, the Bank project will produce a structuring effect on the employment and training sub-sectors by establishing a strategic employment framework, adopting a new methodology for updating training programmes and introducing a job market and training information system. This structuring effect will facilitate the future operations of other partners such as AFD and the EU. 4

1.3.2 Complementarity and parallel financing were also identified concerning key project activities as follows: Support by PAFEJ Development of the National Employment Strategy and the operational plan for its implementation carried out by the ILO Study on skills requirements and update of training programmes in the building and construction sector Monitoring the integration of vocational training graduates will help to assess the external efficiency of the vocation training system and the programme contract-based approach initiated by the World Bank and KFW Complementarity and parallel financing of projects expected to be approved in 2014 and 2015 AECID - USD 300 000 under consideration - It is a decent employment programme which will be implemented through the ILO, comprising: (i) studies on promising sectors; (ii) intermediation support (employability guide and training of counsellors for the National Youth Employment Agency (ANAPEJ)) AFD - EUR 1.625 million for an on-going project for the financing, in 2014 and 2015, of equipment for training centres in streams relating to the building and construction sector; AFD has shown interest in partnering with PAFEJ in carrying out its new EUR 3 million Youth Training and Integration Support Operation (2015-2018), which focuses on the following points: (i) deployment of the Cap Insertion mechanism; (ii) harmonization of training programmes; and (iii) rooting of programmes in the productive system. EU - EUR 1 million for financing training sites through the ILO; the World Bank has shown interest in this initiative which aims to harmonize training programmes, and plans to support the approach in other sectors through twinning. WB - USD 11.2 million under consideration for financing programme contracts, skills training, equipment and rehabilitation of vocational training centres, and financing a human resource development plan. KFW - EUR 9 million to support the development of technical and vocational training: Equipment and technical assistance - introduction of an approach based on the performance of training centres. 1.3.3 Partnership with the ILO is envisaged following discussions with the MEFPTIC to implement the activities of the first component as follows: (i) development of the national employment strategy and the operational plan; and (ii) establishment of an employment market and training information system (SIMEF). In recent years, the ILO has supported the development of the strategy, a draft version of which was prepared in 2013 (see Annex V). This project will help to update the document to take into account the new institutional context and the latest employment surveys. There is also provision for broad-based consultations at regional level and between the various components of the social dialogue. Regarding the labour market information system, the ILO and UNDP supported the baseline survey on employment and the informal sector in 2012. This partnership with the ILO is part of the joint initiative for youth employment in Africa (AfDB/ILO/AU/EU) and will be governed by the terms of the Memorandum of Understanding signed between the AfDB and the ILO in 2004. II. Project Description 2.1 Project Component 2.1.1 The project aims to create favourable conditions for a more inclusive economic growth with the potential to reduce youth unemployment. This will be achieved particularly by placing employment at the heart of sector policies and developing the skills of young people in relation to the productive sector. The project is structured around three complementary components. The first is intended to improve the effectiveness of the employment policy and the SIMEF. The second component aims to establish a mechanism for monitoring youth integration and improving the information on market needs, especially in the building and construction sector in order to adapt the training system. The third component is designed to support project management by strengthening the DPEF and the MEFPTIC to ensure proper implementation of PAFEJ. A detailed description of the project is found in Technical Annex A4. 5

Component Name 1. Integration of employment in sector policies 2. Development of skills related to the productive sector 3. Project management support Estimated Cost UA 1.30 million UA 0.51 million UA 0.21 million Table 2: Project Components Component Description This component aims to provide the country with: (i) A gender-sensitive national employment strategy (including the training component); (ii) Strategies in two key sectors, incorporating quantitative targets in terms of job creation; (iii) A labour market information and operational training system, especially with the production of a report analysing gender disparities in the labour market; (iv) A labour market intermediation structuring system and financing for employment promotion programmes; and (v) An enhanced capacity for the management and governance of employment policy through local technical assistance. The objective of this component is to better tailor training to the needs of the productive sector by: (i) Establishing a mechanism for monitoring the integration of vocational training graduates; (ii) Building the capacity of structures in charge of training and that of employers' representatives in the area of forward planning of employment and skills; (iii) Studying the skills needs of the building and construction sector and updating training programmes (including by integrating entrepreneurship modules); (iv) Supporting the restructuring of the Training Support Fund (FAP-FTP); and (v) (v) Supporting the establishment of an innovative mechanism for the training of trainers of vocational training, including building trainers' capacity in soft skills and entrepreneurship. The idea is to ensure the effective management and implementation of the project by: (i) Establishing the Steering and Monitoring Committees; (ii) Establishing a coordination framework and the project team; (iii) Building the capacity of the project team; and (iv) Recruiting an external firm to audit the project accounts. 2.2 Technical Solutions Adopted and Alternatives Explored In light of available resources and opportunities for developing the identified potential, the option adopted by the project is that which will help improve the effectiveness of employment and training policy for better integration of young people. To this end, the project focuses on the strategic aspects that could leverage the reduction of unemployment rates and ensure high-quality training leading to the youth integration. To operationalize this approach, the project will invest, in consultation with the Government, in two sectors which will serve as models for other branches. The following alternatives were also explored and rejected for the reasons mentioned. 6

Alternatives Brief Description Reasons for Rejection Support the modernisation of vocational training. Support for the strengthening and expansion of active employment programmes 2.3 Project Type This project would consist in overhauling the vocational training system by supporting the PNSDE s three pillars: (i) quality; (ii) access; and (iii) support for the management of the mechanism. This option aims to strengthen the services provided by ANAPEJ by diversifying the products and extending the services to all parts of the country for the sake of inclusiveness and efficiency. This option was rejected in view of the resource constraints and ambitious reforms that it entails. The WB and AFD are currently supporting the implementation of programme contracts in training centres, including in the areas of equipment and rehabilitation. However, there is no support for the harmonization of training programmes and the establishment of a mechanism for monitoring the integration of vocational training graduates. Most qualified job seekers are concentrated in Nouakchott, the base of ANAPEJ, which has little to offer to unskilled job-seekers. In addition, the effectiveness of ANAPEJ's current format in other areas should be proven before the agency is ups-scaled. PAFEJ is an institutional support project. This method has been adopted to provide specific support to lay the foundation for reforms that could have a medium- and long-term impact on youth employment. The need to strengthen the capacity of key institutional players also justifies the choice of this project type. 2.4 Project Cost and Financing Arrangements 2.4.1 The total project cost, net of taxes and customs duties, is estimated at UA 2.22 million. This cost includes UA 1.11 million (50%) in foreign exchange and UA 1.11 million (50%) in local currency. PAFEJ is financed by an ADF grant of UA 2 million (90%) and by the Government of the Republic of Mauritania to the tune of UA 0.225 million (10%). The ADF financing consists of UA 2 million drawn from the country's allocation under ADF-13. 2.4.2 The costs were determined on the basis of information obtained from official sources, national market actors and the Bank's experience in financing similar activities. A 5% provision was included for price escalation, estimated from the projected inflation rate for 2017 1, and another 3% provision for contingencies. Tables 2.3, 2.4 and 2.5 below show the project cost by component, source of financing and expenditure category. 1 World Economic Outlook, April 2014, IMF 7

Components Table 2.3: Project Cost Estimates by Component [in UA million] In MRO million In UA million FE LC Total FE LC Total 1. Integration of employment in public policies 301 301 603 0.65 0.65 1.3 2. Skills development in conjunction with the productive sector 126 126 252 0.27 0.27 0.54 3. Project management support 49 49 98 0.11 0.11 0.21 Base cost 469 469 952 1.03 1.03 2.05 Financial contingencies 25 25 51 0.05 0.05 0.11 Physical contingencies 14 14 28 0.03 0.03 0.06 Total 516 516 1 031 1.1 1.1 2.22 Note: The exchange rates used are shown in the introduction of the report (page (i) Table 2: Sources of Financing [in UA million] Sources of Financing Cost in Foreign Exchange Cost in Local Currency Total Cost % Total ADF 1.1 0.9 2 90% Govt. 0.22 0.22 10% Total Project Cost 1.1 1.12 2.22 100% Table 2.5: Project Cost by Expenditure Category [in UA million] In MRO million In UA million Categories FE LC Total FE LC Total 1. GOODS 19 19 38 0.04 0.04 0.08 2. CONSULTANT SERVICES 411 411 823 0.89 0.89 1.78 3. MISCELLANEOUS 44 44 88 0.10 0.10 0.19 Base cost 475 475 953 1.03 1.03 2.05 Financial contingencies Physical contingencies 25 25 51 0.05 0.05 0.11 14 14 28 0.03 0.03 0.06 Total 514 514 1027 1.1 1.1 2.22 8

Table 2.6: Expenditure Schedule by Component [in UA million] Components 2015 2016 2017 Total 1. Integration of employment in public policies 0.418 0.658 0.227 1.303 2. Skills development in conjunction with the productive sector 0.069 0.380 0.085 0.54 3. Project management support 0.053 0.080 0.080 0.213 Total base cost 0.540 1.118 0.392 2.05 2.5 Project Area and Beneficiaries 2.5.1 The project is an institutional support operation that gives impetus to reform dynamics covering the entire country. The direct beneficiaries of the project are: (i) 8 000 young users of employment support services (50% of whom are women), 6 000 vocational training students and, in particular, 1 275 trainees of building and construction streams (49% of them girls), employees of 430 enterprises of the formal and nonformal building and construction sector; (ii) the structures responsible for basic and continuing training (the Directorate of Vocational Training and the INAP-FTP); (iii) the institutions responsible for employment promotion (Directorate of Integration, Directorate of Employment and ANAPEJ); (iv) other ministries with a sector strategy integrating employment objectives; and (v) the National Federation of Building and Construction Companies. 2.5.2 In the medium term, the implementation of the National Employment Strategy should make it possible to reach 71 157 unemployed persons, including 33 000 women and 52 400 youths aged 14 to 35 years. In the long term, the project will benefit the Mauritanian society as a whole, insofar as the integration of employment in sector policies will create more jobs, and the development of vocational training tailored to labour market needs will provide new employment opportunities for young people, including women. 2.6 Participatory Approach for Project Identification, Design and Implementation 2.6.1 The project preparation followed a participatory and iterative process that allowed consultation of all stakeholders. Consultations began at the preparation of the study on growth and employment in 2012 and continued during the CSP mid-term review in 2013 and the PAFEJ preparation and evaluation mission. Meetings were held with various MAED and MEFPTIC services. The mission also held discussions with representatives of the private sector and civil society: the National Employers' Union of Mauritania, the National Federation of Building and Construction Companies, the Federation of Informal Enterprises, GRET - the NGO engaged in the training and integration of vulnerable youths, with the involvement of the Special Gender Adviser at the Ministry of Women, Children and the Family. Coordination meetings were held with the following financial and technical partners: AFD, WB, IsDB, UNDP, UNFPA, EU and ILO. 2.6.2 The consultative approach will be instituted for the project implementation, with the establishment of the Steering Committee that includes the participation of civil society, the private sector and government departments involved in the project (cf. 4.1. 2). 9

2.7 Bank Group Experience and Lessons Reflected in Project Design 2.7.1 The Bank intervened in the education sector between 2000 and 2007 with two projects, including the creation of the Rosso Higher Institute of Technology (Institut supérieur d enseignement technologique - ISET) - a regional centre of excellence. The first project (UA 6 million), financed by the Bank from 2000 to 2006, was intended to achieve universal education and improve the quality of basic and secondary education. The second project (2002-2007), worth UA 8.3 million, supported the education strategy, including the creation of the Rosso Higher Institute of Technology (ISET), an institution which offers short vocational training courses relating to the agro-sylvo-pastoral sector. The Institute is recognized as a centre of excellence - the graduates of its first two batches (2012 and 2013) enjoyed a 100% integration rate, given that their skills were tailored to the needs of the labour market. The completion reports of these projects underscored the need for project monitoring and regular dialogue with the authorities (cf. Technical Annex B.1). 2.7.2 The appraisal of this project also benefited from lessons learned from the independent evaluation of Bank operations in the social sectors in Mauritania, conducted by OPEV in 2005. The report found that the Bank provided only minimal support for sector-based policies and strategies which, in many cases, determine the impact on development and sustainability of the created infrastructure. Given the weak capacity of the administration, institutional changes that give direction to reforms lacked support. The Bank's intervention has been geared towards institutional support with a view to strengthening reform implementation, adapting training programmes and establishing a job market and training information system. Capacity building is integrated as a cross-cutting thrust of the project through technical assistance and specific training. 2.7.3 The project also benefits from lessons learned from the portfolio performance review conducted during the CSP mid-term review of October 2013 (see Annex 2). This review recommended that project ownership by beneficiaries should be encouraged by involving them in all project phases and clearly defining the responsibility of each institution in project implementation. PAFEJ's institutional arrangements, comprising the establishment of the Steering Committee (half-yearly meetings) and the Implementation Monitoring Technical Committee (quarterly meetings), will allow for adequate involvement of all parties (cf. Technical Annex B1). 2.7.4 PAFEJ is complementary with on-going Bank-supported projects. These include the Project to Build the Capacity of Microfinance Operators (PRECAMF) 2006-2014, which aims to improve the access of the economically active poor to viable and sustainable financial services. PAFEJ-supported National Employment Strategy will deepen reflection on the establishment of a Mauritania Employment Fund, which will aim to channel all funding towards employment support, particularly the allocation of resources to micro-financing and active employment programmes. 2.7.5 The Bank has experience in the design and monitoring of youth employment support and training projects, which gives it value added. Worthy of mention are: (i) the Training-Employment Matching Support Programme and the Building and Construction Sector Skills Needs Identification Support Project in Morocco (2013), which promote greater involvement of the productive sector in training; (ii) the Economic Recovery and Inclusive Development Support Programme in Tunisia, which supports the overhaul of active employment programmes; and (iii) the Youth Employability and Insertion Support Programme in Côte d'ivoire, which supports the operationalization of the employment policy and the establishment of a mechanism for monitoring the integration of vocational training graduates, among others. 10

2.8 Key Performance Indicators 2.8.1 PAFEJ aims to lay the groundwork for policy reforms in employment and vocational training in order to create more youth-friendly employment conditions. The expected long-term impact of implementing these reforms is that youth unemployment rates will drop from 14.3% in 2012 to 12% in 2020. The expected medium-term outcomes are: (i) the adoption of the gender-sensitive national employment strategy and its budgeted operating plan (including gender-sensitive budgeting); (ii) the integration of employment objectives in at least two key sectors; (iii) the establishment of a labour market and training information system that will serve as a decision-making support tool with the production of a specific report on gender disparities in employment access and by sector of activity; (iv) the structuring of job market intermediation enabling at least 8 000 young people to benefit from integration support; (v) the creation of an employment funding mechanism, called the Mauritania Employment Fund, for funding the establishment of lines of credit to finance investments or working capital for small- and medium-sized enterprises (SMEs) created by women; (vi) the introduction of three new renovated sub-sectors in the building and construction sector; and (vii) the establishment of a system for monitoring the integration of vocational training graduates in at least 11 training centres. 2.8.2 To ensure that the recommendations of the various studies are effectively implemented, the project lays emphasis on capacity building, as attested especially by the recruitment of a technical assistant who will provide close support in handling technical issues and upgrade staff skills in key structures responsible for employment and training. Once adopted, the new employment strategy will serve as an engine for all project activities and help confirm the authorities commitment to improving the governance of employment policy. III Project Feasibility 3.1 Economic and Financial Performance 3.1.1 The benefits of this project are brought about by the improved capacity for formulating, implementing and monitoring employment and training policies. While the costs are quantifiable (Section 2.4), it is difficult to identify and quantify the direct and indirect economic and financial impact of operations carried under PAFEJ, intended primarily for institutional capacity building. That is why the financial analysis usually performed for productive projects is not applicable here, given that institutional capacity building operations do not generate any cash flows that would warrant financial analysis. 3.1.2 The project aims to achieve outcomes with medium- and long-term economic returns. The project's economic rationale is that it will contribute to improvement in three respects: (i) the intensity of economic growth and job creation; (ii) the efficiency of public policy in the area of employment; and (iii) labour productivity and economic and social relevance of vocational training. The first effect will stem from the development of a new national employment strategy and the integration of employment creation objectives in at least two of the country's sector-based strategies (Building and Construction, Mining and/or Rural Development). The second effect will stem from the institutional analysis targeting the structures in charge of employment, the diagnosis of the relative efficiency of intermediation services (ANAPEJ and CAP Insertion), the recommendations related thereto for efficient implementation of the national employment strategy and, lastly, the improvement of employment policy management with the establishment of a job market and training information system, and the development of a medium-term expenditure framework for the Ministry of Employment. The third effect will derive firstly from the renovation of basic training through the institution of an educational system focused on the needs of economic sectors (Building and Construction) and, secondly, from the revitalization of training in that it 11

will build the capacity of FAP-FTP to enable it to better meet the needs of companies in the building and construction sector in terms of continuing education. The recruitment, by the project, of technical assistance specialized in employment and training will also help to develop sustainable human capacity for structures in charge of employment, which will ensure the sustainability of project benefits. 3.2 Environmental and Social Impact Environment 3.2.1 As required by the Bank's Guidelines on the Environment, this project is classified under Category 3. Given that it is an institutional support operation, there are no other requirements in terms of environmental and social safeguards. Improving the level of vocational training in the targeted areas will contribute significantly to raising the quality of human resources in Mauritania, particularly in areas linked to the mining, industrial, commercial and rural sectors, and to works in general. The revision of curricula for the building and construction sector, which is being proposed under the project, will provide an appropriate response to environmental concerns. To this end, in developing the training curricula, the project will incorporate environmental awareness modules to raise the level of environmental culture of future employees and promote professional practices that reconcile economy and ecology. Thus, the programmes for such specialties as plumbing, electricity, masonry and driving/operation of machinery will also include modules on environmental protection and the use of green energy. Trainees will be alerted to the need for ecosystem conservation and the impact of various materials on the soil, air, water and biodiversity. Climate Change 3.2.2 Mauritania remains highly vulnerable to climate change - a situation that is increasingly taking its toll on food security (the country imports two-thirds of its food products, representing 2.6% of its GDP in 2012). It may also be noted that the ocean is encroaching on the coast at an alarming rate (affecting Nouakchott, in particular, where 28.5% of the workforce is concentrated), with such attendant consequences as rising sea levels, floods, desertification and silting of cities. 3.2.3 By investing in human capital and social inclusion, the project will help to strengthen the population's resilience as an appropriate response to climate change. Indeed, by raising human resource qualification levels and promoting access to employment opportunities, the project will prepare the beneficiaries not only to emerge from poverty, but also to be better equipped to develop strategies for coping with climate change. In addition to raising awareness about environmental culture, the project includes the development of modules on adaptation to climate change designed to enhance the technical skills of beneficiaries in terms of resilience. Social Impacts 3.2.4 By placing employment and skills development issues back at the heart of public policy in Mauritania, this project will help to ensure the inclusiveness of growth in Mauritania. PAFEJ will generate significant social impact in terms of reducing the risk of vulnerability to poverty and social exclusion by improving the employment situation of young people (reduction of youth unemployment rates from 14.3% to 12% between 2012 and 2020). The combined effects will roll back the poverty rate estimated by the last household survey of 2008 at 42%, a far cry from the 25% target set for 2015. 3.2.5 Thus, the project will ease social tensions inherent in youth unemployment (which affects 62% of young people aged between 20 and 34 years). It will also allow for the mitigation of social conflict among the various segments of the Mauritanian population, especially by reducing regional disparities in access to proper education and employment opportunities. Lastly, the project will enable the 12